Personal Tax

The tax rates and allowances as announced in the Pre-Budget Report have been confirmed and can be found here.

Corporation Tax

The rates for the financial year ended 31st March 2010 have been confirmed, please click here to be redirected to our tax rates and allowances page.

The small companies rate for the financial year ended 31st March 2011 has not been confirmed but, based on the Pre-Budget Report, will rise to 22%.

Carry Back of Trading Losses for Businesses

To assist businesses during the recession, the Pre-Budget Report in November 2008 announced that companies would be able to carry losses back three years instead of the usual one.

The relief was originally given for one year but the Chancellor has announced that this concession will be extended for a further year.

For more information, please see here.

VAT Changes

The registration limit will increase to a taxable turnover of £68,000 and the de-registration limit to a VAT exclusive figure of £66,000 from 1st May 2009.

Fuel scale charges will also change from 1st May 2009 to take account of the changes in the price of fuel. Full details can be found here.

It has also been confirmed that the standard rate of VAT will return to 17.5% from 1st January 2010.

Section 660 / Settlements Legislation / Income Shifting

The good news about the above was that there was no news in this year’s budget !

The proposed legislation has been deferred indefinitely but we will report on our site as soon as HMRC make an announcement.

If you would like to discuss how this news affects you, please contact us.


Changes from 6th April 2010


Personal Tax Rates & Allowances

The chancellor announced various changes relating to Income Tax, in particular, an additional rate of tax and in income-related reduction to the Personal Allowance.

The following changes come into effect from 6th April 2010:

· There will be a higher rate of 50% for taxable income above £150,000. This rate is being introduced a year earlier than previously announced and is also 5% higher than the 45% announced in the Pre-Budget Report.

· The new higher rate for dividend income will be 42.5% for taxpayers with income above £150,000. The 32.5% rate will still apply for individuals with income below this figure.

· The basic personal allowance will be gradually reduced to Nil for individuals with ‘adjusted net income’ above £100,000.

Late Filing & Late Payment Penalties

Starting in 2010, HMRC are introducing new penalty regimes for late filing of Returns and late payment of tax.

Penalties for late filing where the obligation to file the Return is annual or occasional (e.g. Self Assessment Tax Return, CT600, P35, P11D) include:

· £100 penalty immediately after due date for filing (whether or not tax has been paid)

· Daily penalties of £10 per day for Returns more than 3 month late (max 90 days)

· 5% tax geared penalty for prolonged failures (over 6 months and again at 12 months)

· 70% tax geared penalty for failure to submit Return over 12 months and has deliberately withheld information necessary for HMRC to assess tax due (100% penalty if deliberate with concealment).

Penalties for late payment where the obligation to make payment is annual or occasional (e.g. Self Assessment Tax Return, CT600) include:

· 5% penalty of tax unpaid after one month

· Further 5% penalty of any amount still unpaid at 6 and 12 months

· Suspension of late payment penalties where taxpayer agrees time to pay arrangement with HMRC.

Individual Tax Relief on Pensions for High Earners

From April 2011 tax relief on pension contributions for those who earn in excess of £150,000 per annum will be restricted on a tapered basis with earners over £180,000 being restricted to 20% tax relief (the same as basic rate taxpayers). Meantime, legislation will be introduced to ensure individuals caught by this change are unable to make a large one-off contribution to use reliefs before this change takes place.

Furnished Holiday Lettings

The Chancellor has advised that from 2011/12 the advantageous treatment for Furnished Holiday Lettings will be repealed and from that year, the tax treatment of such lets will be treated the same as ‘normal’ lettings.


Future Changes


National Insurance Contributions

We also feel it would be worthwhile to remind you of the planned increase to National Insurance Contributions.

From 2011/12 the main rate of Class 1 and Class 4 National Insurance Contributions will be increased by 0.5% to 11.5% and 8.5% respectively.

From 2011/12 the Class 1 Employer rate of National Insurance will be increased by 0.5% to 13.3%. This increased rate will also apply to Class 1A and Class 1B contributions.

Finally, also from 2011/12 the additional rate of Class 1 and Class 4 contributions will be increased by 0.5% to 1.5%.

Footnote

You may be aware that there is a General Election next year and, depending on the outcome of that election, some of these planned changes may not come into force at all !